Psychologist Daniel Crosby wrote an article titled Why Imagining the Worst Can Be for the Best (5 October 2026).
« Most of us approach financial decisions with the same instinct we bring to most areas of life. We figure out what we want to happen and then we look for reasons it will. The investor evaluating a stock looks for reasons the stock will go up. The entrepreneur considering a new venture looks for reasons it will succeed. The household considering a major purchase looks for reasons it makes sense. The instinct is so natural that we rarely notice it operating. »
« Behavioral economists call this confirmation bias, the well-documented human tendency to seek out information that supports what we already believe and to dismiss information that contradicts it. »
« The trouble is that avoiding big mistakes requires a habit of mind that runs against our natural wiring. Asking “why might this be a good idea” comes easily. Asking “why might I be wrong about this” requires deliberate effort, and most of us avoid the discomfort of the second question even when the first one has already been thoroughly answered. »
« A useful practice for any household, business owner, or family making consequential financial choices is to conduct what is sometimes called a pre-mortem. Most of us are familiar with the post-mortem, the analysis conducted after something has gone wrong. The pre-mortem reverses the timing. Before committing to a decision, imagine yourself two years in the future, looking back at how the decision turned out badly. Then write down the most plausible reasons it failed. The exercise often reveals risks that no amount of optimistic planning would have surfaced. »
« The trader and psychologist Brett Steenbarger has captured the principle precisely. “I have found that a large percentage of my winning trades begin with a rehearsal of negative, what-if scenarios. Conversely, I have found that my worst trades begin with an estimate of my potential profits.” »
« Most real wealth, over a lifetime, is built by avoiding catastrophic mistakes rather than by hitting dramatic home runs. The discipline of asking what could go wrong is one of the more reliable ways to identify those mistakes before they happen. »
Books by Danial Crosby
- The Soul of Wealth: 50 reflections on money and meaning (2024)
- The Behavioral Investor: How psychology shapes wealth, risk, and investment decisions (2018)
- The Laws of Wealth: Psychology and the Secret to Investing Success (2016)
